Columbia firm settles $150M fraud case with federal government

Andrea K. Walker, The Baltimore Sun

A Columbia-based health care firmhas agreed to a$150 million settlement with the federal governmentand 43 statesto resolve criminal and civil charges that it submitted claims for millions of dollars of work that it did not perform and operated offices that were not properly licensed, officials said Monday.

A five-year federal investigation found that Maxim Healthcare Services Inc., one of the country's largest providers of home healthcare services, submitted $61 million in false claims for services to the federal government's Medicaid and Veterans Affairs health programs over an 11-year period from 1998 to 2009.

Investigators said managers and workers at Maxim repeatedly modified time sheets and documents to cover up the fraud, creating a culture in whichsubmitting false claims became "common practice."

"Fraudulent billing for services not rendered uses patients as pawns in a game of corporate greed that puts cash over care and wastes precious taxpayer dollars," Assistant U.S. Attorney General Tony West said in a statement.

Thesettlement includes a $20 million criminal fine and $130 million incivil settlements.

Maxim officials said they take full responsibility for the violations. The company said it hired a new CEO in 2009 and changed its business practices to protect against a repeat.

"Over the past two years, we have worked diligently to build an infrastructure of systems, policies, and controls to ensure that employees at every level of the organization not only adhere to all applicable laws and regulations, but also honor our company's own protocols and code of conduct," Maxim CEO Brad Bennett said in a statement.

One watchdog group called the penalty a drop in the bucket for a company that had $2 billion in reimbursements from 2003 to 2009.

"That is hardly crippling," said Joe Newman, a spokesman for the Project on Government Oversight, which tracks government contractors. "It is certainly something that stings Maxim's pocketbook, but they will be fine after that.

"They won't be barred from the Medicaid program. That would hurt them."

Maryland is due to receive $2.25 million, which officials said would be returned to state Medicaid funds. None of the unlicensed facilities was in Maryland.

State officials said that settlement shows the effectiveness of the False Claims Act, a federal law that encourages whistleblowers to come forward by allowing anyone with knowledge of a false Medicaid claim to file a lawsuit and share a percentage of damages.

Maryland passed its version of the legislation last year.

"The $2.25 million we've recovered will help Maryland families who need the health care services this money provides," said Attorney General Douglas F. Gansler. "This is an example of how Maryland can put these whistleblower cases to work in the future now that we have a False Claims law in place."

The investigation was conducted by the federal departments of Justice, Health and Human Services and Veterans Affairs and the FBI. Several state agencies also assisted.

In addition to the fines, Maxim also has been charged criminally with conspiracy to commit health care fraud. But the company could avoid conviction if it meets requirements outlined in the settlement.

Several regional account managers, a home health aid and a clinical services director also pleaded guilty to criminal charges, government officials said.Theycould face as much as $250,000 in fines and jail timefor their roles in the fraud.

One of the employees submitted time sheets claiming he had worked more than 24 hours in a day, according to documents outlining the settlement. Another created false documents claiming nurses had made visits to patients when they hadn't. A third employee cut signatures from real time cards and placed them on false ones.

Maxim said it hadfired several senior executives and other employees, created new positions including chief compliance officer, chief cultural officer, and vice president and general counsel.

The company said italso doubled the size of its compliance and ethics departments and added new software to better track compliance.

With those changes, federal officials say they will allow the company to be monitored for two years before deciding whether to act on the criminal charges.

The Maxim investigation began after Richard West, a Medicaid patient in Ocean City, N.J., filed a lawsuit in 2004 under the False Claims Act.

West, who received home nursing services through Maxim, became suspicious when Medicaid officials told him he had reached his maximum under Medicaid rules. West had kept detailed records and knew that wasn't possible.

Investigatorsfound that Maxim had claimed more than 700 hours of services that were not provided.